Question

Byron Company uses the perpetual inventory system and makes all credit sales on terms of 2/10, n/30 and records these sales following the new revenue recognition principle. The transactions completed for Byron Company during May 2019 were as follows:

CRJ-May 1           Received $50,000 in exchange for common stock issued to stockholders.

PJ-May 1              Purchased merchandise inventory on credit terms of 2/15, n/60 from Rudasill Co. $6,400.

SJ-May 3              Issued invoice #1001 for sale on account to Hockaday, Inc. $5,400. Byron Company’s cost of this merchandise inventory was $2,980.

CRJ-May 3           Collected interest revenue of $4,900.

SJ-May 4              Issued invoice #1002 for sale on account to Oreo Co. $4,400. Byron Company’s cost of this merchandise inventory was $3,300.

CPJ-May 8           Issued check #900 to purchase equipment for cash, $5,800.

CRJ-May 9           Sold merchandise inventory for cash, $3,300, (cost, $2,500).

CRJ-May 10         Received cash from Hockaday, Inc. in full settlement of the account receivable from the sale on May 3. Hockaday earned a discount by paying early.

CPJ-May 11         Purchased merchandise inventory for cash, $6,500, issuing check #901.

PJ-May 11            Purchased office supplies on account from Bordan, Inc. $1,900. Terms were n/EOM.

CPJ-May 13         Issued check #902 to pay Rudasill Co. the net amount owed from May 1. Round to the nearest dollar.

SJ-May 14            Issued invoice #1003 for credit sale to Hockaday, Inc. $1,357 (cost $1,127).

SJ-May 16            Sold merchandise inventory on account to Marion, Inc., issuing invoice #1004 for $1,665 (cost $1,240)

CRJ-May 17         Received cash from Oreo, Co. in full settlement of its account receivable from May 4.

PJ-May 17            Purchased merchandise inventory on credit terms of net 30 from Rudasill Co. $5,500.

CPJ-May 19         Issued check #903 to pay for insurance coverage, debiting prepaid insurance for $3,000.

PJ-May 20            Purchased equipment on credit terms of 3/10, n/60 from Highland Co., $2,430.

GJ-May 22           Returned damaged merchandise inventory to Rudasill Co. issuing a debit memo for $1,500.

PJ-May 22            Purchased merchandise inventory on credit terms of 2/10, n/30 from Rudasill Co. $1,675.

CPJ-May 25         Issued check #904 to pay utilities $1,453.

CPJ-May 27         Issued check #905 to pay Rudasill, Co in full on account from May 17 purchase, less return.

CPJ-May 30         Issued check #906 to pay monthly salaries of $5,200.

CRJ-May 30         Received cash in full from Hockaday, Inc. on credit sale of May 14.

CPJ-May 30         Issued check #907 to pay Bordan, Inc. in full on account from May 11 purchase.

Instructions:

1. Enter the following account balances in the general ledger as of May 1:

11D        Cash                                      $13,450☒                           ☒41C   Sales Revenue                  $7,000

12D        Accounts Receivable       3,250     ☒                           ☒42C   Interest Revenue             2,200

14D        Merchandise Inventory 7,500     ☒                           ☒51D   Cost of Goods Sold          4,600

16D        Office Supplies                  1,450     ☒                           ☒52C   Salaries Exp.                       4,500

17C?      Prepaid Insurance            0              ☐                           ☒53C   Utilities Exp.                       1,250

18D        Equipment                          2,000     ☒                           ☐60D? Sales Disc. Forfeited       0             

21C         Accounts Payable             1,600     ☒          

31C         Common Stock                  11,000   ☒          

32C         Retained Earnings            16,200☒

2. Journalize the transactions for May 2019, using the following special journals: sales journal (page 10), cash receipts journal (page 8), purchases journal (page 13), cash disbursements journal (page 12) and general journal (page 9).
3. Open customer/vendor accounts in the subsidiary ledgers with beginning balances as of May 1 as follows: Accounts Receivable-Adam Co. $3,250; Oreo Co. $ 0; Marion, Inc. $ 0; Hockaday, Inc. $   0. CUSTOMER Accounts Payable-Highland Co. $0; Bordan, Inc. $ 0; Rudasill Co. $ 0; and Zebra Co, $1,600. VENDOR
4. Post daily to the accounts receivable subsidiary ledger and the accounts payable subsidiary ledger.
5. Total each of the columns of the special journals and post the appropriate totals to the general ledger.
6. Prepare a trial balance.

Verify the agreement of each subsidiary ledger with its controlling account.

Answer 1

Sales Journal:-

May 3 Hockaday Inc. A/c _Dr. $5400

To Sales A/c $2980

To Profit A/c $2420

(Being goods sold on credit to Hocaday with profit of $2420)

May 4 Oreo Co. A/c _Dr. $4400

To Sales A/c $3300

To Profit A/c $1100

(Being goods sold on credit with a profit of $ 1100)

May 9 Cash A/c _Dr. $3300

To Sales A/c $2500

To Profit A/c $800

(Being goods sold on cash with profit of $ 800)

May 14 Hockaday Inc. A/c _Dr. $1357

To Sales A/c $1127

To Profit A/c $230

(Being goods sold to Hockaday on credit with of $230)

May 16 Marion Inc. A/c _Dr. $1665

To Sales A/c $1240

To Profit A/c $425

(Being goods sold to Marion Inc. on credit with a profit of $425)

Cash Receipt Journal:-

May 1 Cash A/c _Dr. $50000

To Stockholders A/c $50000

(Being cash received from stockholders in exchange of common stock)

May 3 Cash A/c _Dr $ 4900

To Interest Revenue A/c $4900

(Being Interest Received )

May 9    Cash A/c _Dr $3300

To Sales A/c $2500

To Profit A/c   $800

(Being goods sold on cash with profit)

May 10    Cash A/c _Dr $5400

To Bills Receivable A/c $5400

(Being cash received from Hockaday for the goods on credit on May 3)

May 17 Cash A/c _Dr. $4400

To Bills Receivable A/c $4400

(Being Cash received from Oreo Co. for goods sold on credit on May 4)

May 30    Cash A/c _Dr $1357

To Bills Receivable A/c $1357

(Being cash received from Hockaday for the goods sold on May 14 on credit)

Purchase Journal:-

May 1 Inventory A/c _Dr. $6400

To Rudasil Co. A/c $6400

(Being merchandise inventory purchased on credit from Rudasil Co.)

May 11 Office Supplies A/c _Dr. $1900

To Bordan Inc. A/c $1900

(Being office supplies purchased on credit from Bordan Inc.)

May 17 Inventory A/C _Dr. $5500

To Rudasil Co. A/c $5500

(Being merchandise inventory purchased on credit from Rudasil Co.)

May 20 Equipment A/c _Dr.$2430

To Highland Co. A/c $2430

(Being equipment purchased from Highland on credit)

May 22 Inventory A/c _Dr. $1675

To Rudasil Co. A/c $1675

(Being inventory purchased on credit from Rudasil Co.)

Cash Disbursements Journal:-

May 8 Equipment A/c _Dr.$5800

To Bank A/c $5800

(Being equipment purchased by paying through check)

May 11 Inventory A/c _Dr. $6500

To Bank A/c $6500

(Being inventory purchased by paying through check)

May 13 Accounts Payable A/c _Dr. $50000

To Bank A/c $50000

(Being payment made to Rudasil Co. for the goods purchased on credit on May 1)

May 14 Prepaid Insurance A/c _Dr. $3000

To Bank A/c $3000

(Being payment of insurance made in advance)

May 25 Utilities A/c _Dr. $1453

To Bank A/c $1453

(Being Utilities purchased by making payment by check)

May 27 Accounts Payable A/c _Dr. $5500

To Bank A/c $5500

(Being payment made to Rudasil Co. for inventory purchased on credit on May 17)

May 30 Salaries A/c _Dr. $5200

To Bank A/c $5200

(Being Payment of salaries made by check)

May 30 Accounts Payable A/c _Dr. $1900

To Bank A/c $1900

(Being payment made to Bordan Inc. for the office supplies purchased on credit)

General journal:-

May 1 Cash A/c _Dr. $50000

To Stockholders A/c $50000

(Being cash received from stockholders in exchange of common stock)

May 3 Cash A/c _Dr $ 4900

To Interest Revenue A/c $4900

(Being Interest Received )

May 3 Hockaday Inc. A/c _Dr. $5400

To Sales A/c $2980

To Profit A/c $2420

(Being goods sold on credit to Hocaday with profit of $2420)

May 4 Oreo Co. A/c _Dr. $4400

To Sales A/c $3300

To Profit A/c $1100

(Being goods sold on credit with a profit of $ 1100)

May 9 Cash A/c _Dr. $3300

To Sales A/c $2500

To Profit A/c $800

(Being goods sold on cash with profit of $ 800)

May 10    Cash A/c _Dr $5400

To Bills Receivable A/c $5400

(Being cash received from Hockaday for the goods on credit on May 3)

May 14 Hockaday Inc. A/c _Dr. $1357

To Sales A/c $1127

To Profit A/c $230

(Being goods sold to Hockaday on credit with of $230)

May 16 Marion Inc. A/c _Dr. $1665

To Sales A/c $1240

To Profit A/c $425

(Being goods sold to Marion Inc. on credit with a profit of $425)

May 17 Cash A/c _Dr. $4400

To Bills Receivable A/c $4400

May 20 Equipment A/c _Dr.$2430

To Highland Co. A/c $2430

(Being equipment purchased from Highland on credit)

May 22 Inventory A/c _Dr. $1675

To Rudasil Co. A/c $1675

May 25 Utilities A/c _Dr. $1453

To Bank A/c $1453

(Being Utilities purchased by making payment by check)

May 27 Accounts Payable A/c _Dr. $5500

To Bank A/c $5500

(Being payment made to Rudasil Co. for inventory purchased on credit on May 17)

(Being inventory purchased on credit from Rudasil Co.)

May 30    Cash A/c _Dr $1357

To Bills Receivable A/c $1357

(Being cash received from Hockaday for the goods sold on May 14 on credit)

Adam Co. A/c

Dr. Cr.

Date	Particulars	Amount $	Date	Particulars	Amount $
May 1	To Balance b/d	3250
			May 1	By Balance c/d	3250

Oreo Co.

Date	Particulars	Amount $	Date	Particulars	Amount $
May 4	To Sales A/c	4400
			May 31	By Balance C/d	4400

Marion Inc.

Date	Particulars	Amount $	Date	Particulars	Amount $
May 16	To Sales A/c	1665
			May 31	By Balance C/d	1665

Hockaday A/c

Date	Particulars	Amount $	Date	Particulars	Amount $
May 3	To Sales A/c	5400
May 14	To Sales a/c	1357
			May 31	By Balance C/d	6757

Accounts Payable :-

Highland Co.

Date	Particulars	Amount $	Date	Particulars	Amount $
			May 20	By Equipment A/c	2430
May 31	To Balance C/d	2430

Bordan, Inc

Date	Particulars	Amount $	Date	Particulars	Amount $
			May 11	By Office Supplies	1900
May 31	To Balance C/d	1900

Rudasill Co.

Date	Particulars	Amount $	Date	Particulars	Amount $
			May 17	By Inventory	5500
			May 22	By Inventory	1675
May 31	To Balance C/d	7175

Zebra Co,

Date	Particulars	Amount $	Date	Particulars	Amount $
			May 1	By Balance B/d	1600
May 31	To Balance C/d	1600

Accounts Receivable

Date	Particulars	Amount $	Date	Particulars	Amount $
May 1	To Adam co.	3250
May 3	To Hockaday inc.	5400
May 4	To Oreo Co.	4400
May 14	To Hockaday Inc	1357
May 16	To Marion Inc.	1665
			May 31	By Balance C/d	16072

Accounts Payable

Date	Particulars	Amount $	Date	Particulars	Amount $
			May 1	By Rudasill Co.	6400
			May 11	By Bordan Inc.	1900
			May 17	By Rudasill Co.	5500
			May 20	By Highland Co.	2430
			May 22	By Rudasill Co.	1675
			May 31	Zebra Co.	1600
May 31	To Balance C/d	19505

Trial Balance:-

Particular	Folio	Debit $	Credit $
cash		30007
revenue		7000
Accounts receivable		16072
Accounts Payable			19505
Office Supplles			3350
Prepaid Insurance		4250
Equipment		7800
common stock		11000
Retained Earning		16200
sales			16122
Salaries			5200
utilities			1453
Merchandise Inventory		7175
		99504